Stock Types & Order Types

Types of Stocks

Not all stocks are created equal. Understanding different stock types helps you build a diversified portfolio that matches your goals.

By Company Size (Market Cap)

Large-Cap

Market cap over $10 billion. Stable, established companies like Apple, Microsoft. Lower risk, slower growth.

Mid-Cap

Market cap $2-10 billion. Growing companies with proven track records. Balance of risk and growth.

Small-Cap

Market cap $300M-2B. Younger companies with higher growth potential and higher risk.

Penny Stocks

Stocks under $5, often under $1. Very high risk, low liquidity, often manipulated. Avoid as a beginner.

By Investment Style

Growth Stocks: Companies reinvesting profits for expansion. High P/E ratios, little/no dividend (Tesla, Amazon)
Value Stocks: Undervalued companies trading below intrinsic value. Lower P/E, often pay dividends
Income Stocks: Focus on dividend payments. Utilities, REITs, established consumer goods companies
Cyclical Stocks: Performance tied to economic cycles (auto, travel, luxury goods)
Defensive Stocks: Stable regardless of economy (utilities, healthcare, consumer staples)

Order Types

Understanding order types is essential for executing trades effectively.

Market Order

Executes immediately at the best available price. Use when you need to enter/exit NOW, regardless of exact price. Fast but may have slippage in volatile markets.

Limit Order

Only executes at your specified price or better. Use when you want price control. May not fill if price doesn't reach your level.

Stop-Loss Order

Triggers a market order when price reaches your stop level. Protects against large losses. Essential for risk management.

Stop-Limit Order

Triggers a limit order at your stop level. More price control than stop-loss, but may not fill in fast-moving markets.

⚠️ Order Type Selection

For liquid stocks (high volume), market orders work well. For less liquid stocks or volatile situations, limit orders give you more control. Always use stop-losses to protect your capital.

📋 Key Takeaways

Review this lesson's material before moving on
Practice the concepts on a demo account
Take notes on what you've learned